Century Accounting and Tax Services Inc

One thing you don’t really want showing up in your Coastal Southeastern NC mailbox (besides all of those dental office and windows installation ads) is a collection notice from the IRS.

And, for two years, you had a reprieve thanks to the IRS halting many of their collection notices so they could focus on their million-deep backlog.

Well, now the hiatus is over (as of Jan 2024). And if you have outstanding balances with the IRS, it means you’ve likely gotten one of those letters requiring you to pay up “or else.”

Now you have to face that unpaid tax debt that’s been lurking on the back shelf of your brain.

First, know that a notice like this isn’t the end of the world. Yes, it’s a letter you want to take seriously, but it’s not one that should trigger total hopelessness. Believe it or not, the IRS is willing to work with you. They themselves recognize that a sudden “final notice” letter showing up after a long period of no notices will cause some panic and burden.

They understand this so much that they’re even excusing around 1 billion in late-payment penalties for American taxpayers with unpaid balances under 100K from returns filed in 2020 and 2021. The relief was automatic, but failure-to-pay fees for unpaid balances from 2020 and 2021 will resume April 1, 2024.

Now, note that the IRS doesn’t just jump straight to final notices. The pause on collection notices only affected follow-up reminder notices (these usually drip out every 5 weeks after the first letter). The first letter about unpaid taxes (known as a CP14), were still sent out.

If you had tax debt, it’s possible that you only received that first letter before the IRS paused the automated collection notices.

A few other collection notices you may receive now that the hiatus is over:

– Special Reminder Letter (LT38 Notice): This was sent out last month (February). The intent was to alert you to the IRS’s collections process starting up in a more focused way. It also discussed potential penalty relief options.

– Notice of Intent to Levy (CP504 Notice): This means the IRS could seize your assets (wages, bank accounts, your car) to settle the debt. It can even affect your ability to get or renew your passport.

– Final Notice of Tax Lien (CP503 Notice): This is one you absolutely don’t want to ignore. It officially places a lien on your property, making it harder to sell assets or get a loan.

So what do you do if you’ve received a final collection notice?

Make sure you read the letter carefully to understand what you’re liable for and your payment options.

Then… pay the balance.

Really, it’s that simple. You might say, “I can’t pay my whole balance right now!” That’s not an uncommon sentiment. The good news here is you do have a great option: Set up a payment plan through the IRS’s website.

There are short-term and long-term options available. If you owe 50K or less, including tax, penalties, and interest, you can set up a long-term payment plan online. You can also set up a short-term payment plan (paying the balance in 180 days or less) online if you have less than 100K in combined tax, penalties, and interest.

If you choose the monthly payment option, you can choose the payment amount… somewhat. The IRS will want to know how much you can pay, but will also encourage you to pay as much as you can (this helps with interest and penalties). If you choose an amount that’s too low or just leave it up to the IRS to decide, they’ll usually set your minimum payment at what you owe divided by 72.

Now, a final option on all of this, and one I’d be remiss not to mention: Turning to an experienced tax resolution specialist to help you deal with that notice. It’s not that you can’t do things on your own, but even with all of the great tools the IRS has set up for taxpayers, it can still be such a complicated, nuanced process. Why not trust someone who has experience with tax law to help you face this situation?

We’re happy to be that advocate for you, help you explore all your options, and then negotiate the best possible outcome with the IRS.

Picture this: You’ve been dabbling in cryptocurrency – Bitcoin, Ethereum, maybe even a few of those meme coins. You’ve made some decent trades, seen some gains. Life is good. But there’s that nagging feeling in the back of your mind – did you handle the taxes on all those crypto transactions the right way?

Lately, headlines about the IRS ramping up crypto tax investigations haven’t exactly eased your concerns. You hear about others (maybe some neighbor got a letter) facing the consequences of unreported crypto activity, and suddenly, those tax questions become impossible to ignore.

The IRS is shining a bright spotlight on crypto tax evasion, and they’re not playing around. In fact, they’ve seized over $3.5 billion in crypto and started thousands of investigations related to financial wrongdoing and tax evasion. The days of crypto quietly existing off the radar are over.

If that’s you, don’t panic. But also, don’t bury your head in the sand either. Now’s the time to address the situation. As a tax resolution professional who specializes in helping folks navigate IRS issues, I see it all the time. The excitement of crypto investments overshadows the crucial element of tax responsibility.

So, let’s get down to business and clear the air about crypto tax reporting:

First, know that buying cryptocurrency with regular currency isn’t a taxable event, thankfully. It’s the selling crypto part that brings in tax obligations. Gains are taxed as income, with short-term gains potentially facing higher rates than long-term gains.

Trading one crypto for another counts as a sale. You’ll need to calculate any gain or loss at the time of the trade.

When you receive crypto as payment or mine it yourself, it is considered income and will be taxed accordingly.

Now, don’t let the anonymity of blockchain technology fool you. The IRS has ways to track your transactions so that they can keep track of how much you’re obligated to the IRS for in terms of crypto tax. Popular exchanges cooperate with the IRS by providing information, and they have sophisticated tools to analyze financial movements across various wallets.

Take the Illinois man who was sentenced to 10 years in prison for running a Ponzi scheme using Bitcoin in 2020. He solicited investors with promises of high returns but used their funds for personal expenses. However, the key point here is that the investigation also revealed the man failed to report his own personal gains from the scheme on his tax return, ultimately leading to additional tax fraud charges.

This serves as a stark reminder: not reporting crypto activity, even outside of illegal activities, can have serious consequences.

Now, mostly, people like you aren’t running these kinds of schemes, but if you realize you might have missed reporting some crypto activity on past tax returns, don’t worry.

You can amend your returns. Take proactive steps to correct the mistakes before the IRS comes knocking. You’ll likely face penalties and interest, but it’s far better than a full-blown investigation.

Get the help of an experienced tax professional. Feeling overwhelmed? Consult a professional experienced in navigating IRS issues and crypto tax complexities. I can guide you through the best course of action, including exploring voluntary disclosure programs the IRS offers in certain situations.

Let’s face it, crypto tax laws can be tricky. But the worst approach is ignoring them altogether. Don’t risk your financial future by burying your head in the sand.

Reach out to me today. I can help you understand your situation, navigate the complexities of crypto tax reporting, and get on the right side of the IRS.

A quick note about the business filing deadline. It is a week and a half away (on March 15th)!! I will submit returns and returns that have come in before cut-off and need information before completing extensions on the 14th. The 15th is on a Friday, and the office is closed.

Corporations, S Corporations, and Partnership file 7004 plus the applicable state extension.

Lots of interesting stats in a report of small business outcomes in 2023 to take in if you’re a business owner. Click the link fr more info.

Half of small business owners are planning to allocate budget toward technology and infrastructure. That’s an important number. No not the “budget word” but the two will go hand-in-hand.

Business and tech is an important subject, and especially so when it comes to your business budget.

Karen S. Durda, EA’s
“Real World” Business Strategy Note
Advancing and Protecting Your Business with Your Tech Budget
“Innovation is the application of technology to solve problems.” – Jeff Bezos

Maybe you’ve been thinking of upgrading your technology for your business.

But use your funds wisely – a study by IDC found that businesses waste an average of 20-30 percent of their IT budget on maintaining outdated legacy systems. Instead of spending all of your budget to maintain an antiquated system, allocate a portion of your funds each year toward investing in new technology.

There are a multitude of important areas on which to focus when it comes to business and tech.

So let’s dive into a few areas you should prioritize in your budget to not only advance but also protect your business.

Advancing Your Business

You may have heard of AI a few times in the last couple of years. We’re all probably guilty of rolling our eyes each time we hear about it, because it comes up about every other sentence.

But we can’t deny that generative AI is revolutionizing the way businesses operate. With the potential to add as much as 4.4 trillion in economic value across various industries, AI’s prowess in enhancing productivity and innovation cannot be overstated.

While AI in complex applications gets a lot of attention, a Gartner report predicts that this year, 40 percent of employees will use AI assistants for everyday tasks, like scheduling meetings, summarizing reports, and generating creative content.

Cloud computing is another foundational tech element to prioritize in your business and budget. If you haven’t gone there yet, it really is a secure and flexible solution for storing and accessing your data, regardless of location. Subscription-based pricing helps you scale your needs up or down as your business grows.

And let’s talk about the growing importance of real-time analysis of customer and business data. Advanced analytics and AI tools can sift through massive datasets to uncover insights that were previously hidden. This not only helps in tailoring products and services to meet customer needs but also in identifying operational efficiencies that can save costs and improve productivity.

Make informed decisions that drive results. That’s the name of the business success game this year, and in years to come. You can’t afford not to.

Protecting Your Business

Then there’s the flip side of advancement – protecting your business from digital criminals looking to capitalize on all of it. As businesses embrace digital transformation, the specter of cyber threats looms larger.

So investing in cyber threat intelligence and network security is no longer optional. Cybersecurity measures are essential in an era when the cost of cyberattacks has reached all-time highs.

Cyber threat intelligence services, for example, provide real-time insights into the latest threats and vulnerabilities, allowing you to proactively strengthen your defenses. Think of it as having a security expert constantly on the lookout for potential dangers.

And your network security should involve firewalls, intrusion detection systems, and encryption technologies.

As staff shortages are only predicted to grow in tech fields, consider training your own staff for your unique needs related to tech and your business.

As it applies to protecting your financial data, make sure you use an accounting firm like ours that utilizes the latest accounting software and cloud solutions.

The potential for tech to revolutionize every aspect of your business, from operations to customer engagement and beyond, is immense. And overwhelming. So let’s start with your accounting data security. My team and I can help protect you.

PS – If you filed an ERC claim in error and want to pay back money you received, the IRS has a new voluntary disclosure program for you. The program runs through March 22, 2024 (that only gives you a few weeks).

Even better news: Because the ERC mills charged a percentage fee, thus reducing the amount you received, the IRS has made provisions requiring only 80% of the claim be paid back. (Thanks, Uncle Sam.)

A quick reminder for those of you working under a corporate status: we gotta file those returns for you by March 14th — so help us help you. Use the secure portal to upload your documents. The deadline to get items in my office is Thursday at 5 p.m. Anything uploaded after Thursday after that time may not be processed and you will be asked to prepay 50% of last year’s charges before I proceed or efile an extension

Finally, if you received ERC and think that the funds did not apply to your business, time is running out to make a voluntary disclosure and repay the funds.

I put this out here because I’m looking out for your best interests. My job is to ensure my clients are not only staying on the IRS’s good side but that they’re also staying out of trouble with their financial decisions.

I’m here to give you guidance on a variety of business- and tax-related things. That includes things like sales tax holidays. While these aren’t in every state, knowing how they work and what they mean for your business is just good preparation.

Some of the 2024 holidays are already behind us, but most are still ahead. So let’s get you proactively preparing for what they mean for your business’s tax situation.

Karen S. Durda, EA’s
“Real World” Business Strategy Note
The Nuances of Sales Tax Holidays For Business Owners
“The man who is prepared has his battle half fought.” – Henry Ford

Sales tax holidays have both advocates and opponents. While consumers and politicians often celebrate these holidays for the savings they offer, the implications for business owners, especially in terms of compliance and reporting, are considerably more complex.

Sales tax holidays are not as widespread as you might think. In 2023, only 18 states participated, ranging from a weekend to much longer periods, with Florida standing out for its extensive offerings, including a year-long tax exemption on certain appliances and a “Freedom Summer” for outdoor activities.

Impact on businesses

For businesses, these holidays present a double-edged sword. On one hand, they’re purported to drive increased foot traffic and sales.

On the flip side, they introduce a layer of complexity in tax compliance and reporting. Retailers face additional complexities in implementing and recording tax-exempt transactions, adding costs and potential errors.

The financial implications of these holidays are significant, costing states and localities nearly 1.6B in lost revenue in 2023. This loss highlights the trade-off between stimulating consumer spending and funding essential public services.

Preparing as a business

For you as a business owner, compliance during these holidays requires preparation to ensure that your point-of-sale systems are updated to accurately reflect tax exemptions during the holiday periods. Then reporting sales tax during these periods must be handled with care to ensure that exemptions are properly accounted for and reported to tax authorities.

This is no small feat, especially for small businesses that may not have dedicated tax compliance teams.

This is where professional accounting services come into play. By leveraging expert support (smile), businesses can ensure that they remain compliant, while also taking full advantage of the opportunities these tax holidays provide.

I mentioned earlier the opportunities these holidays can offer for a sales boost, though the stats indicate you’ll have to be intentional about making more than a 1-3 percent gain. Some research shows that consumers may delay purchases outside the holiday period, so it seems they are paying some attention to the potential for savings.

Promoting the sales tax holidays on your marketing channels is an obvious way to create buzz, as is offering your additional promotions. One additional idea you could implement would be to offer a donation to your favorite local charity based on a percentage of sales generated during the holiday. Turn that savings into goodwill among your customers and your community.

Sales tax holidays in 2024

As we look forward to the year ahead, here are the dates and specific exemptions in each state. Note that some dates and holidays are still TBD.

Here is a link to help you find states’ sales tax holiday

Here are the holidays for 2024.

Sales tax holidays do offer a unique opportunity for businesses to drive sales, but they also require careful planning and compliance efforts. Need help? My team is here with support and resources:

Hit the contact us button and make sure you let us know what help you need. or give the office a call Monday through Thursday 8am to 5 pm

Preparing for the year ahead,

PS – Have you filed your Beneficial Ownership Information report (BOI) yet? While you have until the end of 2024 to get it finished, why not go ahead and knock this one off your list now while you’re thinking about it?

(Note: BOI reporting doesn’t apply to every business. Reach out if you’re not sure you need to file a report. We can help explain the rules to you.)

For a long time, the NFL was hands-off when it came to Las Vegas. They were unwilling to get anywhere close because of the long-time commissioner’s caution about the connections some big NFL names had with well-known mob connections.

Commissioner Pete Rozelle and his successors were adamant about their anti-sports betting stance. Major changes in the NFL’s attitude toward Vegas came, slowly but steadily. First with the Raiders finding a new home in its bright lights, and then the location for Super Bowl LVIII.

Major changes come to every industry with the effects of technology and the sway of public opinion. When times change and circumstances change, it means businesses (even giant ones like the NFL) need to progress with them.

How are you progressing in your Coastal Southeastern NC business with all the changes the past five years? The impact of digital accessibility and the increasing prevalence of those with non-noble intentions in those online spaces are bearing down on everyone’s decisions. That includes big hitters like Google.

See, in case you missed it, there was a MAJOR email sending update that Google and Yahoo pushed out on February 1. I’m jumping in here today to give you a brief overview of that update — because you’re a business owner regularly sending out emails to your customers and prospects, and you absolutely need to be in compliance.

Your IT people are hopefully already on top of this Gmail and Yahoo update, but just in case, here’s what you need to know.

Business Owners, A Big Gmail Update Is on the Way
“If spam emails were calories, I would be morbidly obese.” – Scott Adams

Remember the good old days when it was easy to send emails to your customers? Yeah, those days are officially over. As of February 1, 2024, the Gmail update (and a similar update from Yahoo) implemented stricter security measures to fight spam and make things safer for users.

The list of technical requirements can seem a bit overwhelming, but really, it all just means we need to adapt our emailing habits a bit.

So, what exactly changed? Think of it like showing your ID at the door. The Gmail and Yahoo updates means these email giants are now checking for three key things:

1. Authentication

Basically, your email needs to prove it’s really coming from you and not some imposter. This involves setting up DKIM, SPF, and DMARC – acronyms that serve as your email’s security badges. (Don’t worry, your IT people know what these are.)

2. Reputation

Spam complaints are a big no-no. Specifically, more than three spam reports for every 1K emails you send will negatively affect your email reputation and cue the delivery of your emails to junk folders.

So make sure your emails are relevant, valuable, and easy to unsubscribe from.

3. Engagement

Blasting emails to everyone you’ve ever met won’t work anymore. Focus on building relationships with your audience, sending only to those who actually want to hear from you, and keeping them engaged.

One important distinction to make with this Gmail update is that Google and Yahoo are identifying those who send 5K+ emails per day as bulk email senders. Those types of senders are subject to additional regulations, such as the requirement to incorporate one-click unsubscribe in email headers.

The downside to all of this is that you’re definitely going to need technical support to implement the new requirements. Don’t try to do this yourself — hire experts to do this for you. Your email list is too valuable.

The upsides are plural. Your emails land safely in inboxes. You get higher ROI on customer service and marketing efforts. And it also means you also don’t have to compete with giant spam machines anymore.

Translation: Your efforts to comply with this Gmail and Yahoo update will be well worth your investment.

So, are you ready to embrace this new era of email? Remember, it’s not about fancy tricks — just follow the rules and enjoy the benefits. Kind of like paying taxes. Speaking of which, have you scheduled your tax appointment yet?

The most common money management tips that experts give to people in Coastal Southeastern NC with tax or financial difficulties involve saving, budgeting, and planning.

But there’s another money habit that never makes those lists of money management tips, and it’s worth sharing, because it can have a profound effect on your attitude toward money and life in general.

So I’m here to encourage you to add this tip to your money and debt management strategies this year: giving. Yes, giving.

A study by researchers at the University of British Columbia and Harvard University has shown something that I hope will inspire you: spending money on others can actually make us feel happier. That’s a different piece of advice than you might have been expecting.

Now, before you think, “But I barely have enough for my own needs, how can I think about spending on others?” let’s consider how it can be possible, even on a tight budget.

The researchers looked into the lives of 630 Americans, asking them about their happiness, income, and how they spend their money, including their bills, personal treats, gifts for others, and charitable donations. They also looked at people who got bonuses from work, ranging from 3K to 8K, to see if there was a link between how they spent their bonus and their happiness.

What they found was that it wasn’t about the amount of money people had or received that determined their happiness. Instead, it was about how they used their money. Those who chose to spend more on others or donate to charity felt happier than those who didn’t.

In another part of their research, participants were given a small amount of money (5 dollars or 20 dollars) and were asked to spend it by the end of the day. Some were told to spend it on themselves, and others on someone else. The people who used the money for someone else ended up feeling better at the end of the day than those who spent it on themselves, regardless of the amount they spent.

This shows us something very powerful: the act of giving, even in small ways, can lift our spirits and bring us a sense of joy, even when we’re facing financial challenges — even the tax kind.

The beauty of this finding is that the amount doesn’t have to be big. It’s the act of giving itself that counts. It could be as simple as buying a coffee for a friend, donating a couple of dollars to a cause you care about, or even just buying a small gift for a coworker.

My takeaway? A small gesture of kindness towards someone else could be a step toward feeling a bit happier yourself. It’s not about ignoring your tax problems — that’s what I’m here to help you with practically. But sometimes, a paradigm shift and baby steps in a new direction can make just as big of a difference in the long-term.

So let’s add that to our list of money management tips to implement this year.

But I’m curious — what will you do with this information? I’d love to hear…

Most college basketball fans know when March madness happens and they plan for it. Every year. Do you know what else happens every spring? No, not spring training, but that does happen. The March 15 S-corp and partnership filing deadline for 2023 taxes. And about two months from the filing deadline for every other kind of business. Have you started preparing your filing documents and filling out forms? I have a hard deadline to get your paperwork and deposit in.

Have you reserved time to get that taken care of by someone who knows exactly how to handle all of that? Very few face-to-face slots are left, and for businesses that means a review. Paperwork should be dropped off or placed into the secure portal ~Contact.FirstName~, but get on it (ASAP):

910-796-0099

And yet another deadline fast approaching is the March 22 ERC withdrawal deadline. The IRS has given directions on how to file for Voluntary Repayment.

If someone else filed for you, it’s worth it for you to skim those 7 warning signs on the IRS’s website. The withdrawal option is only available until March 22, then no more, and anyone with a false claim will face more serious penalties once that passes.

Make the most of that time by looking over yours.

Because we are at the beginning of the new year optimism is high, and you might feel more time luxury than usual (generally speaking) I want to encourage you to invest in yourself, and your business.

Good business strategy and planning does NOT come in a neat, plastic wrapper. It often takes some exploratory digging to get to the right solution.

Karen S. Durda, EA’s
“Real World” Business Strategy Note
A Tale of Failed Business Strategy and Planning
“You can do anything, but not everything.” – David Allen

An uncle of R.U. Darby caught gold fever back in the gold rush days, setting off West with dreams of striking it rich.

He claimed his spot and got to work, shovel in hand. After weeks of tough labor, his efforts were rewarded with the discovery of gold. But to get that gold out, he needed machinery. So, he went back home, rallied support from family and friends, and managed to fund the necessary equipment.

With machinery in place, Darby and his uncle mined their first batch of ore and sent it off, only to discover they’d hit one of the richest veins in Colorado. They were on the brink of massive profits, just a few shipments away from clearing their debts.

But then, the gold vanished. Despite their desperate attempts to find it again, they came up empty-handed. Defeated, they sold everything for scraps and headed home.

The man who bought their machinery consulted a mining engineer. The engineer revealed that the project had failed because the owners were not familiar with fault lines. His research found that the vein would probably be found just a few feet from where the men stopped drilling.

And that is exactly what happened. This “junk” man found gold just three feet from the original drilling and went on to make millions from that mine, all because he recognized the value of seeking expert advice.

The lesson I want to leave with you today: ask for help when you’re stuck. Don’t quit. Darby’s uncle and Darby himself learned this the hard way. The true gold, it turns out, wasn’t just in the earth but in the wisdom they failed to seek.

What business problem has you stuck with? I might be able to help provide strategy and planning, and if not, I might know someone else who would be a good fit.

This weekend we got a chance to see what’s trending in the world of music via the 66th Annual Grammy Awards. But something that wasn’t talked about on stage was the struggles of the music industry right now.

A lot of artists are facing difficulties with promoting their music online thanks to Universal’s battle with TikTok. And many music giants, including Universal and Spotify, are issuing layoffs across the board.

And yet, Taylor Swift is a juggernaut through it all with really industry-savvy moves like re-releasing her old albums and producing her own movie.

It pays to pay attention to what’s trending and strategize about how to capitalize on it.

Before I get to those things, let me make a quick plug for getting on my calendar because business tax deadlines are coming and last-minute action is NOT a good strategy for keeping your Coastal Southeastern NC business compliant and tax-light.

There are a lot of nuances to business tax strategy (capitalizing on deductions, dealing with ERC withdrawals, payroll adjustments, etc.) and those take time to sort through.

I’m often asked by my business clients this time of year what they need to know that’s new for 2024. Since I’m having these conversations individually, I figured I might as well write about it for you too.

In addition to the newest regulations that we know for sure are happening, I’m also including some small business trends on the horizon that are good to at least be aware of. Now you know.

Century Accounting and Tax Services, Inc.’s Guide to 2024 New Small Business Trends & Regulations
“Small businesses are essential, not just for the economy, but for the soul of our communities.” – Amanda Brinkmann

New year, new list of small business trends to follow. This article is intended to give you a quick overview so you don’t have to go track down each new tidbit you hear about in the news.

This list isn’t all-inclusive; it’s a sampling of the small business trends I’ve been watching with interest.

Definitely happening

Minimum wage increases – If your state is seeing an increase this year, you likely already know about it. Over 20 states will get wage hikes this year — here’s the full list of states, new minimums, and effective dates.
Venmo and Paypal payment reporting requirement pushed – In November, the IRS once again pushed back a rule about reporting payments over 600 dollars through third-party platforms like Venmo or Paypal. Instead of needing to report those payments for 2023, they’re looking to establish a 5K threshold for the 2024 tax year as part of a gradual approach towards implementing the 600 dollar reporting requirement.
Business ownership reporting with FinCEN – I’ve already written about this multiple times in recent months so I won’t spend a lot of time here. Most businesses formed before 2024 have until Jan. 1, 2025 to report their owners, but new companies created this year get 90 days from “go-live” to share that info with the government.

Possibly happening

Expanded overtime eligibility – In August, the Department of Labor proposed a rule to extend overtime eligibility to 3.6M more workers. This change would require salaried employees in certain roles to receive overtime pay if they earn less than $55,068 annually (for full-timers), a significant increase from the previous $35,568 threshold. Legal challenges are expected when the final rule is released, which could happen in 2024.
Additional reporting for small business loans – To reduce discrimination and boost transparency in loans, the Consumer Financial Protection Bureau (CFPB) decided last year to require banks to report demographic and income details of small business loan applicants. The goal is to create a mortgage industry-like database.But critics argue these new rules may slow down and make it harder to get small business loan approvals. The CFPB has temporarily delayed compliance deadlines due to ongoing legal matters, but this is a crucial development to watch in 2024.
Interesting to note: As a result, 42 percent of small businesses are considering alternative financing options like crowdfunding, revenue-based financing, and invoice factoring in 2024.

Who knows if they’re happening but they’re interesting

This small business trend isn’t going away: 72 percent of Gen Z and Millennials plan to start a side gig in 2024.
58 percent of small businesses say access to affordable healthcare for employees is their biggest regulatory challenge in 2024. I’m curious if you feel the same?
Almost half of small businesses are planning to permanently adopt a hybrid or fully remote work model in 2024.

What small business trends would you add to this list, my friend?

The IRS has started on its promises to ramp up compliance and collection efforts with not only the big hitters on the tax side of things (high-income individuals, complex partnerships, and large corporations). They are also having the computers search for non-filers, non-paying individuals, and soon with the New Beneficial Owners Information report required of LLCs and Corporations formed by the Secretary of State or Stae Tax Board for hidden non-reported income.

This comes as the result of unbelievably high audit rates among low-income wage-earners taking the earned income tax credit (EITC) – more than virtually everyone else.

The latter group of taxpayers has historically been targeted not because they account for the most tax under-reporting, but because 1) low-income earners taking the EITC were easy marks in an era when the IRS relied on correspondence audits, and 2) the IRS lacked the resources to assist taxpayers or answer their questions.

Now, with more money to improve technology and more manpower on their side, they’re working hard to shift their efforts to more complex, highly detailed returns.

So, with the IRS Audit and Enforcement team on the prowl for new cases, and, should you find yourself in their crosshairs, knowing their process is going to be optimal for you.

The first step the IRS will take to enforce tax compliance is almost always the audit.

Dealing with an audit, even if only via correspondence, is never fun — nor is it something to be done without effective representation.

That said, there is good news: IRS auditors do not have the final say.

Here’s what I mean…

Before the IRS can finalize an audit, they are required by law to give you rights to dispute it in federal Tax Court and with an IRS appeals officer.

Before any audit becomes final, the IRS must notify you of your rights to dispute it. This letter is called a “Notice of Deficiency.” This notice gives you the right to take the IRS audit to the Tax Court and have an independent judge review it. You will have 90 days to file a petition to the Tax Court after the IRS sends you the notice of deficiency.

And even if those 90 days have already expired, you may still qualify for “audit reconsideration” instead.

Now, before the IRS goes to trial, they typically send your case to an IRS Appeals Officer for settlement. The IRS Appeals Officer’s job is to settle the case based on how a judge might rule, not on how an auditor might rule. As a result, these IRS Appeals Officers have flexibility not always shown by auditors. Most IRS examination cases settle this way, with results not available when only going through the typical audit channels.

You see, Tax Court judges and IRS Appeals Officers perceive cases differently from IRS auditors. If you feel that you are being unnecessarily or over-aggressively audited (and have evidence or can make effective testimony thereof), you can summarize to the Appeals Officer what you will tell the judge. If the Appeals Officer — in preparation for trial — can see that their auditor was being unreasonable, they can often make different kinds of attempts to settle the case in anticipation of how an independent judge might rule.

The auditor often has a small view of your case and does not consider how outsiders would decide it; that changes when the final decision is not in the hands of the IRS, but of the Tax Court.

That said, here is what an IRS Auditor CAN do…

The Tax Law specifically places the burden of proof on you to back up what is on your tax return.

Proving the correctness to an auditor is not easy. The IRS wins over 80% of all audits, often because people are not able to properly verify data on their tax returns. Recordkeeping is the downfall of most audit victims.

Congress gives the IRS broad, but not unlimited powers in auditing. The IRS, in the course of an audit, may:

1. Inspect your business premises,
2. View your home office,
3. Scrutinize your records, and
4. Summon records held by others.

Auditors look for personal expenses disguised as business deductions. With small businesses, the IRS Auditor is always on the lookout for people who bury personal expenses in their business records. Cars, travel, and entertainment are often targets. In these areas particularly, it quite literally pays to keep good records.

In all of this and other instances … well, it’s helpful to have a pro on your side.

If you’re in an audit situation, you don’t have to do it alone. I’m here for you.

Are you ready for some FOOTBALL? Even if you do not watch pro football everyone wants to catch the Super Bowl (Sunday, February 11). It’s probably one of the most watched events in America. Oh and trivia, but I bet you know this one, Dominos sells more pizza than any other time during the year. Wonder who has the drink concession??? But I digress….

Exciting this year not only that Taylor Swift will be there cheering on her man. It’ll be a 2020 rematch, and the Chiefs will be on the hunt to win back-to-back Super Bowls (something only 8 teams in NFL history have accomplished).

Whether you watch to cheer on your favorite team, chuckle at the commercials, or see Usher perform at half-time — or if you decide not to watch it all — you know it’s happening. Everyone’s talking about it.

It’s the same way you know when tax filing season is happening. It’s being talked about everywhere you turn (even Turbo Tax is airing commercials during football games to remind you).

And now that tax season has officially begun, as of Monday the 29th, let me also deliver this little reminder that your 1099 forms for non-employee compensation — like the 1099-MISC and 1099-NEC — are due to the IRS and form recipients by Wednesday, January 31. Oops, this email is after the filing deadline. But you can still send them it.

It’s probably too late to avoid penalties if you’re just now getting them out. For the future, make a plan that prevents that from happening for other important deadlines (like getting out the other 1099 forms by February 15th, or waiting too long to get your tax information to start the filing process).

I am trying to make sure that deadlines are listed on the website for such deadlines as filing of W2 and 1099s and corporate, Trust/Estate/and Partnership filing in March. Even though the filing date by law is the 15th of April, that is also a DC holiday and the whole city shuts down. If it falls on a Saturday or Sunday it is the next business day. April 15th is a Monday so “technically” you have until the 16th to get a timely filed return or extension in.

Why not set up an appointment to get that process started? I offer in-person and video. Let us know which one you prefer, or if you are a new client we will get you onto our secure portal.

In other tax news, you’re also now getting access to more online features at IRS.gov. As part of last year’s Inflation Reduction Act (IRA), the IRS has rolled out new online business accounts for business owners. Similar to the existing individual accounts, these accounts are intended to provide businesses with more visibility and ease of communication with the IRS.

What specifically are these IRS business accounts good for? And should you get one? Well, that’s what I’m writing about today…

Karen S. Durda, EA’s
“Real World” Business Strategy Note
Should You Utilize an IRS Business Account?
“Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.” – George Herbert

I’ll start with the first question you’re probably asking:
Should I get one of the new business accounts the IRS is now touting?

Short answer: Yes, if you qualify (of course). Only certain entities are eligible. But it’s a useful, new tool for your business.

The new IRS business accounts are now available to sole proprietors (as of Oct 2023), and S corps and partnerships (as of Dec 2023). These accounts allow owners, partners, and shareholders to view account information, transcripts, and notices, and also make payments, among other things.

One big benefit for businesses is the ability to view business tax transcripts directly within the account. This means you can verify tax data for loans and applications, and stop making multiple transcript requests.

For ease of information sharing, you can give your accountant access to the account as well.

To create an IRS business account, you’ll need your employer identification number (EIN). If you don’t have one of those, you can apply for one online. The business account application process also involves answering some security questions and verifying your identity with a photo ID. Set aside 15-20 minutes to complete the application.

Some of the beneficial uses for your business (not comprehensive):

Verify that the IRS has your proper business name and address
Make tax payments
Check to see if an entity issued you a 1099
Review the status of your quarterly estimated tax payments
Authorize powers of attorney
Read your IRS notices
View tax transcripts
Set up authorized users, like your accountant

And the word is that more features are still to come, along with access to more types of business entities, assuming IRS funding for these improvements remains available. With Congress you never know, so we’ll keep you posted.

This is just one more tool for your toolbelt as you manage your business taxes and financials in partnership with your accountant. Kudos to the IRS for making this happen. And I’d love to hear your feedback about your experience setting up, and using this new account. If you set up your ID.ME to access your tax account ( remember the first name on the tax return is the Social Security number/name to use. Spouses can also obtain an account but you will only see wage and income information for that Social Security Number.

I cannot assist in the preparation of anyone’s filing as it is not covered by my Error and Omissions Insurance. The IRS just raised the penalties and am not willing to proceed and not be covered. BUT THE GOOD NEWS is that several of my clients have done it and said it wasn’t that hard as long as you have a jpeg of your ID to upload. Oh, and a camera for a face shot.

Feel free to forward this article to a business associate, client, or a family member or friend you know who could benefit from our assistance. Who knows they may want to branch out to start a business! While these particular articles usually relate to business strategy, as you know, we specialize in financial management for business owners and families. And we always make room for referrals from trusted sources like you.

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